The most well-known example of financial misselling is payment protection insurance or PPI. This scandal broke in 2011 and since then, £38.3 billion has been paid in compensation to consumers who were missold PPI on lending products such as mortgages and credit cards.
But what exactly is “misselling”, and how does it apply to financial products beyond PPI? Furthermore, how can you claim compensation?
What Is Financial Misselling?
Any business that sells financial products must comply with the guidance set out by the Financial Conduct Authority (FCA) for fair and clear practice. If you have experienced any of the following, you may have been a victim of misselling:
- The information you received about the product was incomplete or misleading
- The risks of purchasing the product were not explained clearly to you
- You received bad or inadequate advice
- You felt pressured into buying the product by a pushy salesperson
- The seller failed to inform you about additional fees that you’ve been charged.
If the above led you to buy an unsuitable product or to purchase a product with hidden commitments, you could be eligible to file a compensation claim.
You can still claim even if you have not lost any money. If the product is unsuitable or not what you reasonably expected it to be based on the information given to you at the point of sale, there are grounds for a claim. However, you cannot claim just because a financial investment failed to deliver the return you hoped for — unless the seller misled you about the prospects and risks of the product.
What Type of Products Can I Claim For?
PPI is still one of the most common types of financial misselling that consumers claim for. Although the deadline for new claims passed in August 2019, there are some exceptional circumstances under which consumers can seek compensation.
Other examples of financial products that have been missold are:
- Mortgages and endowments
- Investments and ISAs
- Packaged Bank Accounts (PBAs).
Banks are the most common perpetrators of misselling practices, but third-party brokers may also be responsible.
How Can I Claim for Financial Misselling?
- Collect All Relevant Information — your claim will carry more weight if you provide every scrap of evidence from the start. This can be a time-consuming process if you are claiming for a product purchased many years ago, but written proof is one of the best ways to state your case.
- Complain to the Provider — provide any written evidence you have and explain your position clearly and calmly via the organisation’s complaint process. Give the provider a chance to acknowledge and rectify the error.
- Contact the Financial Ombudsman Service (FOS) — if you don’t get a satisfactory response from the provider, escalate your complaint to the FOS. You must do this within six years of being sold the product or within three years of when you became aware of the problem. You can also contact the Pensions Ombudsman if this is the product you were missold.
If the company that sold you the product has since gone out of business, you may be able to claim through the Financial Services Compensation Scheme.
You can avoid the hassle of this potentially lengthy and stressful process by using a claims management company to handle your claim. You’ll have to pay a percentage of any compensation awarded to the company, but their experience and resources will increase the chances of your claim succeeding. And if you’re busy juggling work and other commitments, having a professional do all the legwork means one less thing on your to-do list.
If you suspect that you’ve been missold a financial product, it’s worth exploring the possibility. If you are eligible for compensation, this should place you in the same financial position that you would have been in, had you not been a victim of misselling.
Whether you choose to pursue a claim independently or use a professional claims company to do the hard work for you, success could result in a healthy boost to your bank balance. Check your records now to discover how much you might be entitled to.